Download Understanding Relationship Marketing and Loyalty Program

Understanding Relationship
Marketing and Loyalty Program
Effectiveness in Global Markets
Joshua T. Beck, Kelly Chapman, and Robert W. Palmatier
ABSTRACT
Relationship marketing (RM) and loyalty programs (LPs) are key differentiation strategies for firms facing increasing
global competition. Accordingly, global interest in RM and LPs has surged, though researchers examining these marketing activities typically apply U.S.-centric frameworks to international research contexts. To understand how RM and
LPs may be influenced by factors that distinguish global markets, this review offers a comprehensive framework of
both RM and LP mechanisms and considers how cultural and developmental contingency factors may alter the effects
of these mechanisms on seller performance. The results from this review produce eight propositions about where specific RM and LP strategies should be most effective. By considering these mechanisms jointly, the authors also simultaneously delineate RM and LP theories and broaden the scope of global research in both domains.
Keywords: relationship marketing, loyalty programs, culture, economic development, international marketing
he groundswell of international interest in relationship marketing (RM) and loyalty programs (LPs),
both in practice and as a substantive area of academic research, stems from the strategic competitive
advantages associated with robust buyer–seller relationships (Palmatier et al. 2013; Samaha, Beck, and
Palmatier 2014; Tuli, Bharadwaj, and Kohli 2010); the
increasing importance of foreign trade, such that foreign
receipts are nearly half of total revenues for U.S. firms
with foreign trade (Silverblatt and Guarino 2011); and
the proliferation of U.S.-based business theories abroad
(The Economist 2004; Nelson 2011). For U.S. sellers,
both RM and LPs serve as key differentiation strategies,
and perhaps as a result, most research into these strategies adopts U.S.-centric frameworks, with negligible
consideration of how systemic differences between
T
Joshua T. Beck is Assistant Professor, Lindner College of Business,
University of Cincinnati (e-mail: [email protected]). Kelly Chapman is a doctoral student, Foster School of Business, University of
Washington (e-mail: [email protected]). Robert W. Palmatier is Professor of Marketing and John C. Narver Chair in Business Administration, Foster School of Business, University of Washington (e-mail:
[email protected]). Bulent Menguc served as associate editor for this
article.
countries could influence the effectiveness of RM and
LPs (Samaha, Beck, and Palmatier 2014). Yet the
expanding interest in RM and LPs is global in nature;
according to ISI Web of Science, the number of research
articles per year examining RM or customer loyalty as a
topic tripled from 2003 to 2013, and scholars outside
the United States accounted for approximately 80% of
this increase.
Thus, to understand how the effectiveness of RM and
LPs varies across global markets, we review the mechanisms that underpin RM and LP effectiveness and consider how their effects might be amplified by factors that
differ across global markets. Ultimately, the aim of our
review is to establish a comprehensive map of RM and
LP mechanisms, collate the contingency factors that
may influence the effectiveness of RM and LPs worldwide, and offer specific predictions about how certain
contingency factors moderate the benefits of RM and LP
Journal of International Marketing
©2015, American Marketing Association
Vol. 23, No. 3, 2015, pp. 1–21
ISSN 1069-0031X (print) 1547-7215 (electronic)
Relationship Marketing and Loyalty Program Effectiveness 1
Figure 1. Conceptual Framework: Moderating Effects of International Contingency Factors on LP and RM
Effectiveness
Cultural Contingency Factors
ctors
Loyalty Program
Mechanisms
Inertia-based mechanisms
Individualism-collectivism
m
Power distance
Uncertainty avoidance
Masculinity-femininity
Comparison-based
mechanisms
Long-term orientation
Identity-based
mechanisms
Selleer performance
Communal based
Communal-based
mechanisms
E
Econo
omic
i Contingency
C i
F
Fa
actors
Dynamic mechanisms
Resource distribution
Reelationship Marketin
ng
Mechanisms
Technological capital
Security
mechanisms for seller performance. Figure 1 illustrates
our conceptual model.
habits in developed economies (Marketing Science Institute 2014; Shah, Kumar, and Kim 2014).
This research advances international RM and LP
research in several key ways by addressing the simple
but important question, “How should efforts to build
customer relationships and loyalty be adapted across
countries?” First, we extend extant international customer loyalty frameworks (Kumar et al. 2013) by
delineating and offering propositions specific to the
unique and common mechanisms underlying the effects
of RM and LPs. For example, we propose that inertiabased mechanisms (e.g., habit), which primarily underlie LPs but not RM, are more effective in countries
whose cultures avoid uncertainty and in those with large
accumulations of technological capital. This proposition
may be specifically useful to companies expanding retail
operations in foreign markets (Swoboda and Elsner
2013) and generally useful to practitioners who are
increasingly interested in building profitable customer
Second, we consider the moderating effects of economic
development in addition to culture. Culture, which
develops and endures over centuries (Hofstede, Hofstede, and Minkov 2010), has been a primary focus of
international marketing research (Sojka and Tansuhaj
1995), whereas economic development, which fluctuates more in the short run (Piketty 2014; Schumpeter
1934), is often overlooked, despite its importance. This
approach provides a framework that bridges previous
theory and informs substantive managerial decisions,
such as how to adapt RM investments across export
partners to leverage local cultural and economic conditions (Zeriti et al. 2014). Overall, we offer 8 propositions (comprising 14 predictions overall) as to where
RM and LPs will be most effective.
2 Journal of International Marketing
Third, in this review we outline an agenda for further
research based on our proposed framework. For exam-
ple, further research may consider how the cultural and
economic factors presented in our framework influence
“dark side” outcomes of RM and LPs, such as how the
special treatment of some customers can cause envy and
disloyalty among unrewarded customers (Steinhoff and
Palmatier 2014). In addition, we suggest that future
researchers should consider exchange context, such as
whether the exchange involves a high level of service
(Voss, Roth, and Chase 2008). We may expect, for
example, that communal-based RM strategies are more
effective in collectivist cultures and when service levels
are higher—and service level may interact with culture
to ultimately determine the performance of RM strategies. Overall, we generate multiple paths for further
research and offer fresh insights to international RM
and LP management.
MECHANISMS UNDERLYING RM AND LP
EFFECTIVENSS
Relationship marketing is broadly defined as “all marketing activities directed towards establishing, developing, and maintaining successful relational exchanges”
(Morgan and Hunt 1994, p. 22). Strategies that build
customer relationships enhance sales and profit over
time, especially when sellers adopt these strategies before
competitors and when competitive intensity is high
(Kumar et al. 2011). Loyalty programs, which often have
relationship building as a goal, typically include “a
variety of marketing initiatives, including reward cards,
gifts, tiered service levels, dedicated support contacts,
and other methods that positively influence consumers’
attitudes and behaviors toward the brand or firm” (Henderson, Beck, and Palmatier 2011, p. 258). Because in
the modern marketplace sellers increasingly face global
competition and commoditization of products and services, RM and LPs represent key differentiation strategies
(Palmatier et al. 2006; Stahl et al. 2012).
With this foundation, we review mechanisms unique to
RM and LPs, as well as those that are common to both
(e.g., when LPs constitute RM strategies). To build our
conceptual framework, we have reviewed extant frameworks (Henderson, Beck, and Palmatier 2011; Palmatier
et al. 2006) and recent extensions, including dynamic
mechanisms (Palmatier et al. 2013), to develop a comprehensive map of current RM and LP theory. To specify
how the effects of RM and LP mechanisms on seller performance vary across countries, we first thematically
categorize and review mechanisms that underlie the
effects of RM and LP on performance (i.e., main
effects), as Table 1 outlines, and then consider how these
mechanisms might be moderated by global market contingency factors, as Table 2 outlines subsequently.
Inertia-Based Mechanisms
Inertia-based mechanisms enhance seller performance
by increasing the advantages of prior behaviors (e.g.,
repurchasing from a known seller) relative to new
behaviors (e.g., purchasing from a competing seller),
usually through the cognitive ease associated with duplicating previous actions (Wood and Neal 2009). These
mechanisms often establish the effectiveness of LPs (LiuThompkins and Tam 2013). For example, a loyalty
rewards card may increase retention by cuing shopping
behavior at a specific store (Henderson, Beck, and
Palmatier 2011). The effectiveness of inertia-based
mechanisms is evident in customer purchase data: as
much as 85% of customer needs are satisfied through
repeat brand purchases (Schneider and Hall 2011), even
though customers rarely exhibit actual emotional
attachment to the brands they repeatedly buy (The
Economist 2014). In this sense, inertia-based mechanisms may operate outside traditional RM mechanisms,
such as trust and commitment. We consider habit, cognitive lock-in, and economic switching costs.
Habits are the “associations between situational cues
and repeatedly performed behavior options” (Tobias
2009, p. 409). Customers with strong habits rarely stray
from their previous behaviors, and LPs often activate
habits by reinforcing situational cues, such as accrued
reward points, that trigger associated purchase behaviors
(Henderson, Beck, and Palmatier 2011). For example, a
club card that dangles from a customer’s key chain might
serve simultaneously as a reminder of the customer’s
intention to buy milk and a cue to buy milk from the
seller that offers the club card. Although habit underlies
the effectiveness of many LPs, the programs also can
undermine or break habits if they introduce new situational cues, such as when LPs promote complementary
products and thus interrupt habitual purchases or reduce
retention (Liu-Thompkins and Tam 2013). However, we
focus on the positive effects of habits that LPs reinforce.
On an international level, habits likely are pervasive but
can vary at the category level, depending on the cultural
tradition. For example, habitual tea and juice drinking in
the Czech Republic has limited the success of cola brands
in that market (De Mooij 2004).
Similar to cue-based habits, cognitive lock-in, which
refers to cognitive barriers created by brand-specific
Relationship Marketing and Loyalty Program Effectiveness 3
Table 1. Review of Research into RM and LP Mechanisms
Mechanism
Definition
Key International Findings
Business Examples
Inertia-Based Mechanisms
Habit
“Slowly developed associations between situational
cues and repeatedly performed behavior options”
(Tobias 2009, p. 409)
Habits are pervasive but can
vary at the category level,
depending on country-specific
traditions (De Mooij 2004).
Tea and juice brands in the Czech
Republic enjoy natural barriers to
competition from cola brands due
to pervasive beverage consumption habits (De Mooij 2004).
Cognitive lock-in
Cognitive barriers created
by brand-specific knowledge investments (Murray and Häubl 2007)
Cognitive lock-in is a competitive advantage for well-understood domestic brands; foreign
brands may compete better in
less familiar categories (Batra
et al. 2000).
Early education investments in the
Chinese market protected Volkswagen from competitors; customers were hesitant to learn a
competing foreign supplier’s new
policies and procedures (Frynas,
Mellahi, and Pigman 2006).
Economic switching
costs
Losses arising from transitions between products
or competitors (Jones,
Mothersbaugh, and
BeattyDefinition
2000)
Collectivist cultures may be
more likely to risk financial
losses, because they are supported by large social networks
(Mandel 2003).
Key International
Findings
Chinese customers are more likely
to switch to high-risk investment
products because of their higher
tolerance of downside risks
(WeberBusiness
and Hsee
1998).
Examples
Mechanism
Comparison-Based Mechanisms
Prestige
Respect and admiration
based on achievement,
success, or knowledge
(Cheng et al. 2013)
Relationships with foreign
brands enhance prestige in
emerging economies as foreign
brands are symbolic of achievement (Zhou and Hui 2003).
Bufori’s prestige-based promotion
strategy targeted toward male consumers failed in Malaysia, whose
culture emphasizes more equality
between genders (De Mooij 2004).
Envy
Emotional discontent
based on inferior position or inferior receipt
of benefits provided
relative to others
(Feather and Sherman
2002)
The positive effects of envy on
purchase intentions are
reversed in egalitarian cultures
that value modesty (Watson et
al. 1999).
Many customers own multiple cars
in masculine cultures such as Germany and the United Kingdom,
whereas car ownership rates are
lower in countries such as the
Netherlands and Scandinavia (De
Mooij 2000).
In-group association
Pursuit of association
with desired reference
groups (White and Dahl
2006)
The effect of in-group brand
association on performance is
stronger in more developed
countries, where foreign
brands are less prestigious (De
Mooij 2004).
Japanese advertisements insert
domestic symbols (e.g., Mount
Fuji) in foreign brand communications to increase in-group associations (Keillor and Hult 1998).
Out-group dissociation
Avoidance of association
with undesired reference
groups (White and Dahl
2006)
Conflict between home and foreign countries can strengthen
the negative effect of foreign
country dissociation on performance. (Carvalho 2004).
Chanel’s Égoïste fragrance commecial was confusing and “too
French” for U.S. consumers, even
though Chanel was a familiar
brand (Curry 2009).
Identity-Based Mechanisms
4 Journal of International Marketing
Table 1. Continued
Mechanism
Definition
Key International Findings
Business Examples
Communal-Based Mechanisms
Trust
“Confidence in an
exchange partner’s reliability and integrity”
(Morgan and Hunt
1994, p. 23)
Trust has a greater effect on performance when environmental
uncertainty is higher (Guseva
and Rona-Tas 2001).
Trust in large brands such as Haier
and Lenovo is especially effective
in China, where product uncertainty is high (Cayla and Arnould
2008).
Commitment
“An enduring desire to
maintain a valued relationship” (Moorman,
Zaltman, and Deshpandé 1992, p. 316)
Collectivist cultures tend to
emphasize personal rather
than company-based forms of
commitment (Skarmeas, Katsikeas, and Schlegelmilch
2002).
Salesperson turnover is especially
damaging to customer relationships in China (Wang 2007).
Gratitude
“The emotional appreciation for benefits
received” (Palmatier et
al. 2009, p. 1)
The effect of gratitude on reciprocity is stronger in collectivist cultures where customers
focus more on the efforts of
others instead of themselves
(Kitayama, Mesquita, and
Karasawa 2006).
P&G gave away millions of product samples in Japan, where distributors returned the favor by
prominently showcasing P&G in
retail locations (Kaynak and Herbig 2014).
Velocity
The rate and direction of
change in commitment
(Palmatier et al. 2013)
Relationship velocity may be
weaker but more stable in
countries with a greater longterm orientation (Williams,
Han, and Quall 1998).
Compared with those from Western
countries, customers from Japan,
China, and Korea exhibit slower
but less variable relationship
development (Hofstede, Jonker,
and Verwaart 2008).
Resilience
The ability to recover
from stressors and flexibly adapt or even grow
in response to adversity
(Liu, Wang, and Lu
2013)
Cultures that emphasize personal control reduce resiliency,
because relationship fluctuations, which are outside the
actors’ control, are percieved
as more unfavorable and more
damaging to the relationship
(Baker, Gentry, and Rittenburg
2005).
Customers emigrating from
Mexico, whose culture is more
collectivist and deemphasizes personal control, maintain strong
relationships with multinational
companies, despite the disruption
caused by moving abroad (Broderick et al. 2011).
Dynamic Mechanisms
knowledge investments (Murray and Häubl 2007), promotes repeat purchase behaviors and thus enhances
seller performance, albeit through a different process.
When customers invest in learning the cognitive operations associated with an LP’s rules and points system,
switching to a competitor becomes more challenging
because customers would have to replace their previously formed knowledge with competitor-specific
knowledge. Thus, for example, sellers familiar with
Delta’s frequent-flyer program may shy away from
learning Alaska Airline’s points system, even if Alaska
Airlines provides slightly more value. By creating a
unique system to reward customers, sellers can create
barriers to competition (Kivetz and Simonson 2003).
International research has suggested that cognitive lockin is especially effective for early entrants in foreign markets. For example, Volkswagen’s early-to-market
loyalty-building education programs secured Chinese
Relationship Marketing and Loyalty Program Effectiveness 5
Table 2. Review of Research into International Contingency Factors
Factor
Definition
Key Findings
Individualism–
collectivism
“Extent to which people are expected to be
self-reliant and distant from others (individualism) instead of mutually dependent and
closely tied to others (collectivism)” (Samaha,
Beck, and Palmatier 2014, p. 82; see also
Hofstede, Hofstede, and Minkov 2010)
Customers in more collectivist cultures are more motivated
to maintain harmony and more persuaded by relational
partners (Laroche, Kalamas, and Cleveland 2005). Thus,
RM is more effective in more collectivist cultures (Samaha,
Beck, and Palmatier 2014).
Power distance
“Extent to which inequalities between more
and less powerful members of society are
considered acceptable” (Samaha, Beck, and
Palmatier 2014, p. 83; see also Hofstede,
Hofstede, and Minkov 2010)
Customers in cultures with greater power distance are more
likely to make social comparisons, increasing the effectiveness of status cues such as seller expertise (Pornpitakpan
and Francis 2001).
Uncertainty
avoidance
“Extent to which the members of a culture feel
threatened by ambiguous or unknown situations” (Samaha, Beck, and Palmatier 2014, p.
83; see also Hofstede, Hofstede, and Minkov
2010)
Customers in cultures with greater uncertainty avoidance
exhibit a stronger resistance to change and place more
importance on stability (Kale and Barnes 1992; Kale and
McIntyre 1991) because they are more aware of the potential risks associated with change (Deleersnyder et al. 2009).
Masculinity–
femininity
“Degree to which ‘tough’ (masculine) values
prevail over ‘tender’ (feminine) values in a
society” (Samaha, Beck, and Palmatier 2014,
p. 83; see also Hofstede, Hofstede, and
Minkov 2010)
Whereas masculine cultures deemphasize relationships in
favor of competition and achievement, feminine cultures
emphasize relationships and cooperation as means of
achievement (Hofstede, Hofstede, and Minkov 2010; Kale
and Barnes 1992; Steensma et al. 2000).
Long-term
orientation
Extent to which members of a society focus on
perseverance and thrift (long-term orientation) over respect for tradition and obligations (short-term orientation) (Hofstede, Hofstede, and Minkov 2010)
Customers in cultures with a greater long-term orientation
focus more on long-term goals but are less forgiving of violations of trust, which signal short-sightedness that is
incompatible with a long-term focus (Hofstede, Jonker, and
Verwaart 2008).
Cultural Contingency Factors
Developmental Contingency Factors
Resource
distribution
Degree of inequality in the income or wealth
distributed among members of a society
(Heshmati 2006)
Customers in societies with higher income inequality engage
in more self-enhancement, which may increase the performance of highly visible, comparison-based loyalty rewards
programs (Loughnan et al. 2011).
Technological
capital
Accumulation of capacities to invent, commercialize, and utilize technology (Avila and
Evenson 2010)
Technology facilitates customer relationship management
efforts (Ahearne, Hughes, and Schillewaert 2007) but also
can have deleterious effects on RM implementation. For
example, when rapport building is expected in a service
encounter, the use of technology reduces positive evaluations of the exchange (Giebelhausen et al. 2014).
Security
Freedom from or protection against physical
threat (Kramer, Meyerson, and Davis 1990;
Moeller and Harvey 2011; Thomas and Tow
2002)
Low levels of security reduce general levels of trust (Blanco
and Ruiz 2013), which reduces trust in sellers overall
(Grayson, Johnson, and Chen 2008).
6 Journal of International Marketing
customers, who then became hesitant to learn about
subsequent competitive entrants to their market (Frynas, Mellahi, and Pigman 2006).
Financial barriers also can enhance repeat purchase
behavior and, thus, performance. Economic switching
costs describe such barriers, referring to the financial
losses that potentially arise when a customer transitions
to a competitive seller (Jones, Mothersbaugh, and
Beatty 2000). These costs can include contracts with
cancellation penalties or the threatened loss of loyalty
rewards (e.g., airline points) if customers fail to maintain requisite purchase activity levels or defect to a competitor. Even if sellers offer very similar LPs, economic
switching costs may deter customer defection. Research
has also suggested that economic switching costs are
more effective in certain countries; customers in Thailand are more likely to overcome switching costs than
those in Australia, for example (Patterson and Smith
2003); this tendency may stem from the stronger social
support systems in more collectivist cultures such as
Thailand, which reduce the personal consequences of
economic risk (Mandel 2003). Overall, inertia-based
mechanisms typically underlie the effects of LPs on performance and enhance customer loyalty through cue–
behavior associations (habits), knowledge barriers (cognitive lock-in), and financial barriers (economic
switching costs).
Comparison-Based Mechanisms
seller performance. Bufori, an Australian auto manufacturer, signals that a customer relationship with its brand
constitutes an achievement and thus enhances its customers’ prestige. However, this RM strategy proved
unsuccessful in countries such as Malaysia that emphasize cooperation over individual achievement (De Mooij
2004). As this example highlights, the effectiveness of
prestige-based LP or RM strategies can vary widely
across markets, because some markets are far more
prone to social comparison. In addition, an exclusive
benefit that creates prestige for one customer may
invoke envy in another.
Envy refers to emotional discontent resulting from an
inferior position or inferior receipt of benefits relative
to others (Feather and Sherman 2002). Whereas prestige likely enhances retention of the rewarded consumers, envy might increase the loyalty of excluded
customers, who engage in an upward comparison with
rewarded others. Envy motivates customers to improve
their position by seeking the same benefits granted to
others (Van de Ven, Zeelenberg, and Pieters 2009).
However, if bystander customers determine that others’
rewards were unearned, a type of malicious (rather
than benign) envy may emerge, which can cause them
to defect to competitors (Van de Ven, Zeelenberg, and
Pieters 2011). In this sense, attributions largely define
whether feelings of envy produce approach or avoidance motives. In international research, the positive
effects of envy on purchase intentions seem to reverse in
egalitarian cultures that value modesty (Watson et al.
1999). In such settings, conspicuous consumption is
widely regarded as an odious process guided by ulterior, condemned, attention-seeking motives (Ferraro,
Kirmani, and Matherly 2013). Such differences might
explain why many customers in masculine (vs. feminine) cultures such as China, Germany, and the United
Kingdom own a higher number of expensive watches
(De Mooij 2004).
Whereas inertia-based mechanisms relate to the cognitive
ease associated with duplicating previous actions, comparison-based mechanisms are social in nature and
involve assessments of status or rewards relative to the
status or rewards of others. These mechanisms underpin
RM as well as LPs if they include special treatment or
gifts (Palmatier et al. 2009; Steinhoff and Palmatier
2014). They enhance seller performance by increasing the
prestige value of a current relationship or by increasing
the desirability of a potential relationship through envy.
Identity-Based Mechanisms
Prestige refers to respect and admiration based on
achievement, success, or knowledge (Cheng et al.
2013). Loyalty programs can enhance prestige by
rewarding customers for an achievement (e.g., reaching
a purchase threshold) or offering them exclusivity in the
form of selective access to benefits available only to customers who provide high margins (Henderson, Beck,
and Palmatier 2011). Airlines reward higher-paying or
frequent customers with priority boarding or upgraded
seating, for example. Similarly, relationships with luxury brands may offer a form of prestige that enhances
Identity-based mechanisms involve “me/not me”
appraisals, reflecting the attributes that people use to
define their personal and social identities (Bhattacharya
and Sen 2003; Brewer 1991). These identity-based
mechanisms primarily define RM effectiveness because
customers pursue relationships with companies as a
means to express their individual characteristics (e.g.,
intelligence) and social affiliations (e.g., group membership) (Ahearne, Bhattacharya, and Gruen 2005). Two
mechanisms are inherent to this process: in-group association and out-group dissociation.
Relationship Marketing and Loyalty Program Effectiveness 7
In-group association is the pursuit of self-connections
with desired reference groups (White and Dahl 2006).
Customers form stronger self–brand connections with
brands that represent in-groups (Escalas and Bettman
2005); RM strategies that emphasize in-group associations therefore can enhance loyalty and word of mouth
(Bhattacharya and Sen 2003). Prior research has suggested that these associations vary internationally,
depending on the desirability of the in-group. For example, customers are less likely to form relationships with
foreign brands in developed countries because domestic
brands that symbolize their home country are more
respected and desirable (De Mooij 2004). Foreign
brands trying to build relationships in global markets
thus tend to incorporate local symbols in their communications to increase in-group association; for example,
many foreign brands use Mount Fuji in their Japanese
advertisements (Keillor et al. 2011).
In contrast, out-group dissociation implies the avoidance of self-connections with undesired reference groups
(White and Dahl 2006). This effect seems stronger in
more independent countries, where customers have
stronger self-differentiation goals (Escalas and Bettman
2005). Accordingly, RM strategies that involve partnering with undesirable reference groups can quickly result
in widespread customer defection (Berger and Heath
2008), even when the out-groups are mostly favorable.
For example, Chanel’s famous Égoïste fragrance was
deemed “too French” for U.S. customers, even though
Chanel was a popular brand in the U.S. market (Curry
2009).
Communal-Based Mechanisms
Communal-based mechanisms describe the norms or
rules that govern an exchange between customers and
sellers (McGraw and Tetlock 2005; Mende, Bolton, and
Bitner 2013). For their RM efforts, marketers often segment customers on the basis of these mechanisms, defining them as either transactional or relational (Garbarino
and Johnson 1999). Prior RM research has indicated
that three primary communal-based mechanisms guide
relational exchanges: trust, commitment, and gratitude
(Palmatier et al. 2009).
Trust is “confidence in an exchange partner’s reliability
and integrity” (Morgan and Hunt 1994, p. 23). It
enhances the seller’s performance by lowering transaction costs, and it reflects the firm’s size, salespeople,
expertise, and likeability (Doney and Cannon 1997).
International research has suggested that trust is more
effective for reducing transaction costs and increasing
8 Journal of International Marketing
performance in countries with more uncertain markets
or industries (Grayson, Johnson, and Chen 2008;
Guseva and Rona-Tas 2001). Accordingly, the trustworthy reputation of large firms historically has been especially important in emerging economies such as Brazil or
China (Cayla and Arnould 2008).
Commitment, which can arise from trust (Morgan and
Hunt 1994), is “an enduring desire to maintain a valued
relationship” (Moorman, Zaltman, and Deshpandé
1992, p. 316). Commitment builds over time based on
perceptions of relationship value, and it enhances performance by increasing intentions to remain loyal to
(i.e., repurchase from) a seller (Johnson, Herrmann, and
Huber 2006). International research has suggested that
the effect of commitment on seller performance is moderated by cultural dimensions. For example, commitment exerts a stronger effect in cultures that tend to
value status hierarchies and emphasize the importance
of allegiance (Samaha, Beck, and Palmatier 2014). Culture also shapes the target of commitment: people in
cultures that emphasize interpersonal relationships tend
to exhibit commitment toward salespeople rather than
companies (Skarmeas, Katsikeas, and Schlegelmilch
2002). Thus, salesperson turnover harms customer commitment in collectivist countries such as China (Wang
2007).
Gratitude, or “emotional appreciation for benefits
received” (Palmatier et al. 2009, p. 1), operates alongside trust and commitment and also can have a direct
effect on commitment. Gratitude is a prosocial emotion
that enhances the performance of high-effort sellers by
increasing their favorable attitudes and retention
(Morales 2005). The positive effects of gratitude are
stronger in collectivist cultures, where customers focus
more on the efforts of others than of themselves
(Kitayama, Mesquita, and Karasawa 2006). This trend
may explain the success of Procter & Gamble’s (P&G’s)
RM initiative to give away millions of product samples
as gifts in Japan, where distributors reciprocated the
favor by prominently showcasing P&G in their retail
locations (Kaynak and Herbig 2014). Overall, trust,
commitment, and gratitude constitute communal-based
mechanisms that shape the norms that govern
exchanges, thereby enhancing seller performance.
DYNAMIC MECHANISMS
Finally, communal-based mechanisms develop dynamically (Palmatier et al. 2013), so a full understanding of
RM effectiveness demands consideration of the dynamic
mechanisms that regulate relationship development.
However, research on dynamic mechanisms remains
relatively nascent partly because of methodological
obstacles (Luo and Kumar 2013). Early research examined relational mechanisms at various life cycle stages
(Jap 2001); more recent studies consider change as a
construct itself. Two dynamic mechanisms have
emerged from these approaches: velocity and resiliency.
Velocity is the rate and direction of change in commitment (Palmatier et al. 2013) driven by trust, communication, and investments. It offers a better predictor of
performance than the level of commitment because customers base their decisions more on relational trends
than on their current states (Palmatier et al. 2013). In
addition, relationship velocity may be weaker but more
stable in countries with a stronger long-term orientation
because, in these settings, relationships develop over a
longer time horizon (Williams, Han, and Qualls 1998).
Thus, compared with buyers in Western countries, customers from Japan, China, and Korea tend to exhibit
slower but less variable relationship development over
time (Hofstede, Jonker, and Verwaart 2008).
Alternatively, resilience refers to the ability to recover
effectively from stressors and then flexibly adapt or
even grow in response to adversity (Liu, Wang, and Lu
2013). Research on resilience as it relates to RM is
scarce, but social psychology studies of interpersonal
relationships have indicated its key role in predicting
long-term relationship persistence. When partners can
overcome fluctuations in commitment over time, they
are more likely to maintain a relationship (Arriaga et al.
2006). International research on resilience has suggested that cultures that emphasize personal control
suffer lower resilience because relationship fluctuations, which are outside the actors’ control, are perceived as less favorable and thus more damaging to the
relationship (Baker, Gentry, and Rittenburg 2005). As
an illustration, emigrants from Mexico, a more collectivist culture that deemphasizes personal control (Hofstede, Hofstede, and Minkov 2010), often maintain
strong relationships with multinational companies,
despite the disruption caused by their move abroad
(Broderick et al. 2011).
Overall, we thus contend that the mechanisms underlying the effectiveness of RM and LPs can be categorized
thematically: inertia-based mechanisms (habit, cognitive
lock-in, and economic switching costs) enhance seller
performance by increasing cognitive ease through the
repetition of previous action; comparison-based mechanisms (prestige and envy) do so by affixing feelings of
prestige and envy to otherwise routine purchases; identity-based mechanisms (in-group association and outgroup dissociation) enhance seller performance if their
products or services help define customers’ identities;
communal-based mechanisms (commitment, trust, and
gratitude) benefit sellers by altering the norms that govern exchanges; and dynamic mechanisms (velocity and
resiliency) enhance seller performance by shifting the
levels of the communal-based mechanisms over time.
We consider next how and why each of these performance-enhancing mechanisms should be leveraged
across global markets.
HOW RM AND LP EFFECTIVENESS VARY
GLOBALLY
To understand how the effectiveness of RM and LP
mechanisms vary globally, we begin by reviewing the
cultural and developmental contingency factors, outlined in Table 2, that distinguish global markets. Then
we offer predictions about how these factors might
moderate the effects of RM and LP mechanisms on
seller performance. Culture describes the configuration
of values, norms, and expectations that influence how
members in a society process information and experience emotions (Hofstede and Minkov 2010; Kitayama,
Mesquita, and Karasawa 2006; Samaha, Beck, and
Palmatier 2014; Steenkamp and De Jong 2010). We
adopt Hofstede’s five-factor model of culture to describe
how cultural contingency factors might moderate the
effectiveness of RM and LPs (Hofstede and Minkov
2010). Development instead refers to the relative economic progress and capital accumulation that characterizes global markets (Ellis 2003; Heshmati 2006).
Whereas culture ripens over centuries and is passed on
from generation to generation, economic development
features punctuate growth and can vary sharply, even
between countries with very similar cultures (Hofstede,
Hofstede, and Minkov 2010; Piketty 2014). We present
three developmental contingency factors derived from
our review of international research, after considering
culture.
Moderating Role of Cultural Contingency
Factors
Individualism–Collectivism. The individualism–collectivism
cultural contingency factor captures the “extent to which
people are expected to be self-reliant and distant from
others (individualism) instead of mutually dependent and
closely tied to others (collectivism)” (Samaha, Beck, and
Palmatier 2014, p. 82; see also Hofstede, Hofstede, and
Relationship Marketing and Loyalty Program Effectiveness 9
Minkov 2010). Previous research has demonstrated that
RM mechanisms such as trust and commitment are more
effective in societies with more collectivist cultural values
(Samaha, Beck, and Palmatier 2014), possibly because
collectivism enhances the importance of in-groups and
instills beliefs that relationships should be mutually
rather than personally beneficial (Steensma et al. 2000).
Customers in collectivist cultures also are more concerned with maintaining relationship harmony and thus
more persuaded by relational partners (Laroche, Kalamas, and Cleveland 2005).
In line with the greater importance of close relationships
and concerns for relational harmony, we expect that
higher levels of collectivism increase the effectiveness of
identity-based and communal-based RM and LP mechanisms because customers in more collectivist cultures
focus more on the importance of relationships and the
significance of in-group identity (Hofstede, Hofstede,
and Minkov 2010). As collectivism increases, the markers of group identity provided by LPs should satisfy customers’ stronger in-group identification motives. The
evidence of LP successes and failures worldwide supports this prediction. For example, membership cards
increase purchase behaviors more effectively in more
collectivist countries (e.g., Singapore) than in more independent countries (e.g., the Netherlands) (Noordhoff,
Pauwels, and Odekerken-Schröder 2004). Furthermore,
consumers in more collectivist cultures should be more
responsive to communal norms that regulate relationships and promote reciprocity in the form of greater loyalty (Samaha, Beck, and Palmatier 2014); this rationale
may explain why Japanese customers were quick to
reciprocate P&G’s gift campaign, in that Japan is characterized by relatively high collectivism (Hofstede, Hofstede, and Minkov 2010; Kaynak and Herbig 2014). We
therefore predict the following:
P1: As cultural collectivism increases, (a) identityand (b) communal-based mechanisms exert
stronger effects on seller performance.
Power Distance. The power distance cultural contingency factor captures the “extent to which inequalities
between more and less powerful members of society are
considered acceptable” (Samaha, Beck, and Palmatier
2014, p. 83). Greater power distance increases people’s
focus on social rank because they view society in terms
of hierarchies and social roles (Hofstede, Hofstede, and
Minkov 2010). Customers in cultures with greater
power distance therefore may be more likely to make
social comparisons, which should increase customer
reactions to cues that suggest differences in ranking or
10 Journal of International Marketing
status (Pornpitakpan and Francis 2000). Comparisonbased RM and LP mechanisms—such as prestige and
envy that arise from receiving exclusive treatment or
observing its conferral on others (Steinhoff and
Palmatier 2014) or from relationships maintained with
luxury brands (De Mooij 2004)—thus should have
stronger effects on seller performance in cultures
marked by greater power distance because customers in
these cultures likely compare their rewards with the
rewards received by others or their exchange relationships against the exchange relationships maintained
with others. This prediction is congruent with recent
evidence of the effectiveness of status-based marketing
in high-power-distance markets such as China, where
customers exhibit stronger preferences for exclusivity
and status-based exchange relationships (Atsmon et al.
2012). Thus, we predict the following:
P2: As cultural power distance increases, comparisonbased mechanisms exert stronger effects on
seller performance.
Uncertainty Avoidance. The uncertainty avoidance cultural contingency factor captures the “extent to which
the members of a culture feel threatened by ambiguous
or unknown situations” (Samaha, Beck, and Palmatier
2014, p. 83). Previous research has demonstrated that
products diffuse more slowly in cultures marked by
greater uncertainty avoidance (Tellis, Stremersch, and
Yin 2003), because uncertainty avoidance increases
people’s resistance to change and simultaneously
increases the importance they assign to stability (Kale
and Barnes 1992; Kale and McIntyre 1991). Customers
in cultures with higher uncertainty avoidance are more
aware of the potential risks associated with change
(Deleersnyder et al. 2009). Therefore, as uncertainty
avoidance increases, inertia-based mechanisms that
enhance seller performance by increasing the relative
advantage of previous behaviors should be even more
effective. The risks associated with changing their behaviors are highly salient among customers in uncertaintyavoidant cultures, making them less likely to stray from
their previous behaviors. That is, customers in these cultures should be more likely to rely on habits or previously learned knowledge because breaking those habits
or learning about a new company’s policies and procedures seems riskier. A customer survey by Garcia,
Lacayo, and Martinze (2012) offers evidence in support
of this prediction. The authors find that fewer than 2%
of Mexican customers (vs. 11% of U.S. customers)
switched to lower-cost food brands in the previous 12
months. The stronger effects of prior purchasing habits
in Mexico (vs. the United States) may be explained by
Mexico’s much greater uncertainty avoidance (Hofstede, Hofstede, and Minkov 2010).
P3: As uncertainty avoidance increases, inertiabased mechanisms exert stronger effects on
seller performance.
Masculinity–Femininity. The masculinity–femininity
cultural contingency factor captures the “degree to
which ‘tough’ (masculine) values prevail over ‘tender’
(feminine) values in a society” (Samaha, Beck, and
Palmatier 2014, p. 83). Whereas masculine cultures
deemphasize relationships in favor of competition and
achievement, feminine cultures emphasize relationships
and cooperation as means for achievement (Hofstede,
Hofstede, and Minkov 2010; Kale and Barnes 1992;
Steensma et al. 2000). Customers in more feminine cultures thus are more likely to help strangers, in an effort
to build relationships (Lam, Lee, and Mizerski 2009).
Consistent with the intense affiliation focus in more
feminine cultures, we expect that as cultural masculinity
increases, the effectiveness of communal-based RM and
LP mechanisms (trust and commitment) diminish. Furthermore, the emphasis on competition in more masculine cultures may accentuate the effects of comparisonbased mechanisms (prestige and envy) because
competition naturally increases social comparisons
(Gibbons and Buunk 1999). Thus, for example, customers try to build relationships with high-status automotive brands, which increase prestige and invoke envy,
more in masculine cultures such as Germany and less in
feminine cultures such as the Netherlands (De Mooij
2000; Hofstede, Hofstede, and Minkov 2010). Thus, we
predict the following:
P4a: As cultural masculinity increases, communalbased mechanisms exert weaker effects on
seller performance.
P4b: As cultural masculinity increases, comparisonbased mechanisms exert stronger effects on
seller performance.
Long-Term Orientation. The long-term orientation cultural contingency factor captures the extent to which
members of a society focus on perseverance and thrift
(long-term orientation) rather than respect for tradition
or obligations (short-term orientation) (Hofstede, Hofstede, and Minkov 2010). Customers in cultures with a
stronger long-term orientation focus more on long-term
goals but are less forgiving of violations of trust because
such violations signal a short-sightedness that is incompatible with a long-term focus (Hofstede, Jonker, and
Verwaart 2008). Therefore, we expect a long-term ori-
entation to moderate the effectiveness of inertia-based
and dynamic mechanisms. Specifically, customers with a
longer-term goal focus should be more likely to implement their intentions to override inertia-based mechanisms such as habit (Wood and Neal 2009); prior behaviors should have less bearing on present behaviors when
customers focus more on the future. Customers with a
long-term orientation also are more likely to change
their spending habits and make long-term investments
(Howlett, Kees, and Kemp 2008), so we similarly expect
that they might change their routine purchase behaviors,
despite the incentives of loyalty rewards, to achieve their
personal goals. Therefore, inertia-based mechanisms
should be weaker in cultures with a stronger long-term
orientation. In addition, dynamic mechanisms such as
velocity and resilience should be less effective as longterm orientation increases. This is because violations of
trust or commitment, which naturally arise in any relationship, are more damaging in cultures with stronger
long-term orientation, which should make relationships
grow more slowly. These predictions are consistent with
findings that customers in Eastern cultures, which have
stronger long-term orientations, are slower to develop
relationships (Hofstede, Jonker, and Verwaart 2008).
We therefore predict the following:
P5: As long-term orientation increases, (a) inertiabased and (b) dynamic mechanisms exert weaker
effects on seller performance.
Moderating Role of Developmental
Contingency Factors
A society’s culture develops and endures over centuries
(Hofstede, Hofstede, and Minkov 2010); its economic
development is a more short-term feature. Since the
Industrial Revolution, economics and social welfare
scholars have classified countries on the basis of how
their development compares with that of their neighbors
(Piketty 2014; Schumpeter 1934). In marketing, despite
substantial investigations of the role of culture
(Steenkamp 2001), less attention has focused on developmental factors. This oversight may be significant
because economic development influences markets and
can be orthogonal to culture (Henrich et al. 2010). For
example, despite the relative cultural similarity between
Iran and Saudi Arabia (Hofstede, Hofstede, and Minkov
2010), the per capita gross domestic product of Iran is
one-fifth that of Saudi Arabia (World Bank 2014). We
thus consider three developmental contingency factors,
derived from comparative international frameworks that
may influence the effectiveness of RM and LPs: resource
distribution, technological capital, and security.
Relationship Marketing and Loyalty Program Effectiveness 11
Resource Distribution. This developmental contingency
factor captures the degree of inequality in the income or
wealth distributed among members of a society (Heshmati 2006). Distribution inequality relates quadratically
to economic development, such that the greatest
inequality occurs at moderate levels of economic development (Chen 2003; Kuznets 1955). Greater distribution inequality reduces the general level of trust in a
society, especially among low earners, because they view
the world as less fair; in addition, communities become
more divided (Oishi, Kesebir, and Diener 2011). Thus,
as resource distributions become more unequal,
communal-based RM and LP mechanisms such as trust
and commitment should have stronger effects on seller
performance because rare, trust-based relationships
grow more notable, important, and effective (Guseva
and Rona-Tas 2001). Thus, for example, customer trust
and commitment have twice the effect on seller performance in Brazil compared with Norway (Samaha, Beck,
and Palmatier 2014) possibly because resource distributions in Brazil are twice as unequal as those of Norway
(World Bank 2014). Greater resource inequality also
reduces customers’ satisfaction with their level of possessions because they note wider possession gaps with
wealthier customers (Ordabayeva and Chandon 2011).
Accordingly, customers in countries with greater
resource inequality engage in more self-enhancement
(Loughnan et al. 2011). We predict that the wider possession gaps that characterize societies with greater distribution inequality increase the effectiveness of RM and
LP comparison-based mechanisms because customers
try to “keep up with the Joneses” by forming relationships with more prestigious companies (Ordabayeva
and Chandon 2011) or signaling their status with exclusive loyalty rewards (Steinhoff and Palmatier 2014).
That is, we predict the following:
P6: As resource distribution becomes more unequal,
(a) communal-based and (b) comparison-based
mechanisms exert stronger effects on seller
performance.
Technological Capital. Defined as the accumulation of
capacities to invent, commercialize, and exploit innovative technologies (Bell and Pavitt 1997; Robertson and
Gatignon 1986), technological capital correlates with
economic development. Specifically, greater market
integration and competition enhance the opportunities
for sellers in a society to develop and use technologies
(Bustos 2011; Guillén and Suárez 2005). If the country
possesses higher levels of technological capital, sellers
also are more likely to use technology to facilitate their
customer relationship management (Payne and Frow
12 Journal of International Marketing
2005). These expanded RM tactics may lead customers
in these countries to become acclimated to sellers’ constant attempts to build trust and commitment, such
that they no longer respond to most sellers’ RM
attempts (The Economist 2014). Previous findings indicate that RM strategies are more effective for firstmovers that implement the strategies before their competitors (Kumar et al. 2011). Thus, difficult-to-form
customer relationships, once formed, should be more
valuable to sellers in countries with greater technological capital. That is, existing levels of trust, commitment, and gratitude (communal-based mechanisms)
should be more effective in countries with higher levels
of technological capital because customers learn to
ignore competitors’ attempts to build relationships,
rendering these efforts less effective.
A similar prediction arises for the effectiveness of inertiabased mechanisms. Customers in societies with higher
levels of technological capital are continually bombarded with LP offers (Ferguson and Hlavinka 2007),
many of which involve complicated accrual and
redemption rules (Henderson, Beck, and Palmatier
2011). As technological capital increases, we anticipate
greater competition among LPs, each with specific rules
that customers must learn, such that the likelihood that
customers seek out novel LPs may decrease. The inertiabased mechanisms therefore may be more effective in
cultures with greater technological capital because customers are less likely to stray from their previous behaviors. The tendency for technology to create a narrowed
focus is particularly evident in studies of telecommunications: Internet expansion has made more information
more readily available to users, but people are less likely
to seek out or receive exposures to unfamiliar information as the web increases in complexity (Pariser 2011).
Increased variety also can cause consumers to feel overwhelmed, such that they simply stick with what they
know. Accordingly, customer habits are receiving
increasing research attention in countries with high
technological accumulation (Marketing Science Institute
2014; Shah, Kumar, and Kim 2014), possibly out of
recognition that customers in these societies find it more
difficult to overcome entrenched behaviors. In summary,
we expect the following:
P7: As level of technological capital increases,
(a) communal-based and (b) inertia-based
mechanisms exert stronger effects on seller
performance.
Security. Finally, security refers to freedom from or protection against physical threat (Kramer, Meyerson, and
Davis 1990; Moeller and Harvey 2011; Thomas and
Tow 2002). It might be provided by formal institutions
(e.g., police force) or greater social capital, defined as
“the information, trust, and norms of reciprocity inhering in one’s social networks” (Woolcock 1998, p. 153).
As societies develop and become more integrated in
global markets, institutions and social norms evolve in
ways that tend to increase overall security (Henrich et
al. 2010). The association between development and
security is so fundamental that even the dilapidation of
physical structures can reduce people’s perceptions of
security (O’Brien and Wilson 2011). Low levels of security in turn invoke several key effects for customers.
First, insecurity reduces institutional trust (Blanco and
Ruiz 2013), which may make it more difficult for sellers to build trust among customers (Grayson, Johnson,
and Chen 2008). Second, insecurity reduces perceptions
of personal power, which subsequently amplify the
effects of disorder on mistrust (Ross, Mirowsky, and
Pribesh 2001). That is, insecurity creates a vicious cycle
of mistrust. Third, insecurity can cause fear, which
prompts coping responses (Sternthal and Craig 1974),
such as becoming more emotionally attached to familiar brands (Dunn and Hoegg 2014). Customers experiencing fear also may become anxious (Keller and Block
1996) and engage in regulatory processes to reduce
these unpleasant feelings, which can lead to fatigue or
psychological depletion (Gailliot, Schmeichel, and
Baumeister 2006).
Drawing on these findings, we offer several predictions about how security should influence the effectiveness of RM and LP mechanisms. Because insecurity reduces the availability of psychological resources
needed to change behaviors (Muraven and Baumeister
2000), we predict that lower levels of security increase
the effectiveness of inertia-based mechanisms. In other
words, customers who experience low levels of security and expend cognitive and emotional resources to
cope with that insecurity should be more likely to rely
on their prior behaviors when making decisions,
which would increase the effectiveness of habits or
cognitive lock-in created by LPs. Because insecurity
also reduces trust, we expect that lower levels of security increase the efficacy of trust and commitment
toward current sellers. This prediction is similar to
P6a, in which we argue that lower levels of general
trust make existing relationships more valuable. Thus
we anticipate the following:
P8: As the level of security increases, (a) inertiabased and (b) communal-based mechanisms
exert weaker effects on seller performance.
DISCUSSION
Relationship marketing and LPs are potent strategies for
increasing seller differentiation and enhancing retention
(Palmatier et al. 2006; Stahl et al. 2012). Recent increases
in international competition have prompted an expansion
of global interest in RM and LPs, though researchers still
tend to apply U.S.-based frameworks abroad (Samaha,
Beck, and Palmatier 2014). To understand the potential
for international differences in RM and LP effectiveness,
this review proposes a comprehensive framework of the
multiple mechanisms that underlie RM and LPs, as well as
how each mechanism may be moderated by multiple cultural and developmental contingency factors. As a product
of this effort, we offer 8 propositions (comprising 14 predictions overall) about how the effect of each RM and LP
mechanism might be leveraged in international markets.
Table 3 contains a summary of these predictions.
Our propositions provide key directions for managers
aiming to tailor their RM and LP strategies to appeal to
a specific culture. What adjustments should a manager
make to the structure of an LP or RM strategy to succeed in a different culture? Our review of the mechanisms that underlie RM and LPs outlines the determinants of success for various RM or LP strategies. We
also use cultural factors to extend these findings and
propose more appropriate circumstances for emphasizing certain mechanisms. That is, our eight proposals
leverage prior findings about different aspects of culture, apply these findings to the RM and LP domains,
and identify unique cultural circumstances in which specific RM or LP mechanisms should be particularly beneficial. For example, a hierarchical LP that activates status needs should be more successful in a masculine
culture because it invokes comparison-based mechanisms that appeal to members of highly masculine cultures (P4b). However, implementing the same LP in a
highly feminine culture, without adjusting its structure,
may result in less success because these latter cultures
are less likely to respond to prestige or envy mechanisms; instead, they likely respond better to communalbased mechanisms such as trust and commitment.
In addition, the interaction of developmental contingency factors with RM and LP mechanisms can be
critical to the strategy’s success. In countries with severe
resource inequality, for example, communal-based RM
mechanisms should have substantial effects on seller
performance, so establishing a strong reputation and
gaining consumer trust may be a higher priority. Furthermore, these effects may be additionally strengthened when cultural feminism is higher. This example
Relationship Marketing and Loyalty Program Effectiveness 13
Table 3. Summary of Predictions
General
Mechanisms
Specific Constructs
Inertia-based
mechanisms
Habit, cognitive lock-in, economic switching costs
Uncertainty avoidance (+), long-term orientation
(–), technological capital (+), security (–)
Comparison-based
mechanisms
Prestige, envy
Power distance (+), masculinity (+), resource
inequality (+)
Identity-based
mechanisms
In-group association, outgroup dissociation
Collectivism (+)
Communal-based
mechanisms
Trust, commitment,
gratitude
Collectivism (+), masculinitiy (–), resource
inequality (+), technological capital (+), security
(–)
Dynamic
mechanisms
Velocity, resilience
Long-term orientation (–)
Leveraging Factors (Direction)
would suggest that communal-based RM mechanisms
are especially effective in many South American countries such as Chile, Costa Rica, and Guatemala, where
inequality and cultural feminism is relatively high. In
other words, RM strategies that enhance trust and
commitment (e.g., communication, expertise, relationship benefits; Palmatier et al. 2006) may be most effective in these countries.
Overall, we offer 14 testable propositions for further
research. Testing individual propositions across countries may prove challenging, but recent efforts, such as
meta-analyses that incorporate country-level information about samples to test country-level moderating
effects (Samaha, Beck, and Palmatier 2014), have
demonstrated that such research is feasible. In addition,
we consider several approaches for building on our proposed framework.
Future Research Directions
This review bridges theory across multiple disciplines to
shed light on how RM and LP strategies should be
adapted internationally. In addition to offering multiple
propositions, the framework presented in this review is
a springboard for further research. For example, we
only considered moderation effects that were clearly
supported by extant theory, but as the many theories
drawn on in this research are refined and expanded,
new moderation predictions will likely emerge. In addition, we only consider performance as a key outcome,
14 Journal of International Marketing
Propositions
P3, P5a, P7b, P8a
P2, P4b, P6b
P1a
P1b, P4a, P6a, P7a, P8b
P5b
but other outcomes (e.g., word of mouth) may also be
affected. Moreover, future studies may extend the
framework presented in this review in several key ways,
which we outline in detail next.
Delineating RM and LPs. Relationship marketing and
LP research has largely ignored key similarities and differences between RM and LP strategies. If the goal of an
LP is to build or maintain customer relationships, it can
be categorized as an RM strategy. However, this goal is
not always central, so LP research is distinct from the
RM domain. In this review, we sorted the thematically
categorized mechanisms according to their relevance to
either LP or RM research, in an effort to help clarify the
overlap between these domains. For example, inertiabased mechanisms primarily affect LPs, often beyond
the scope of RM, whereas identity-based, communalbased, and dynamic mechanisms primarily affect RM
and relationship-oriented LPs. Comparison-based
mechanisms affect both RMs and LPs, as long as the LP
involves rewards or special treatment. These insights are
helpful, and yet there is also benefit in studying RM and
LPs separately. For example, the overlap between RM
and LP mechanisms suggests the need to consider interactions between the mechanisms that underlie both concepts, such as the relationship between habit as an inertia-based mechanism and commitment as a
communal-based mechanism. Further research might
consider ways in which LPs give rise to mechanisms that
leverage RM to understand how LPs can complement
rather than simply serve as RM strategies.
Examining the Dark Side of RM and LPs. Future studies should also consider how the negative aspects of RM
and LP strategies vary internationally. For example,
unrewarded customers who observe dispensation of loyalty rewards to others are one key example of a negative
effect of relationship-orientated LPs, in which LP strategies have unintended consequences on observing customers. More specifically, a hierarchically structured LP
that gives highly ranked members visible, special treatment above members who are lower on the hierarchy
may cause these lower-ranked members to feel extreme
envy (Steinhoff and Palmatier 2014). This effect may be
greater in egalitarian cultures, where customers are less
likely to respond to status signals (Kim and Zhang
2014), or in feminine cultures, where customers are
more concerned about the needs of others (Hofstede
1998).
In addition, as relationships age, levels of commitment
may decrease, increasing the chance for opportunism to
occur after trust has been established (Moorman, Zaltman, and Deshpandé 2008). This negative effect has the
potential to be particularly destructive in collectivist cultures, where communal mechanisms are predicted to
have a stronger effect. Furthermore, this type of opportunism and disregard for the history of the relationship
may be more likely in individualistic cultures and cultures without a long-term orientation because shortterm-oriented cultures may be more preoccupied with
outcomes related to the immediate future rather than
relying on the implied long-term outcomes of any established relationship. Members of individualistic cultures
may similarly be distracted from the well-being of others
or the relationship itself in favor of concern for their
individual well-being.
Furthermore, in relationships, customers often feel pressure to return a favor or kindness. This “norm of reciprocity” (Palmatier et al. 2009; Perugini et al. 2003)
may lead to a trade-off situation in which the costs of
reciprocation outweigh the benefits of continuing the
relationship. Feminine cultures, collectivist cultures, and
long-term-oriented cultures are predicted to be more
sensitive to this norm. Masculine cultures, individualistic cultures, and cultures with a shorter-term orientation
may be more likely to break off a relationship because
of the high costs of reciprocation.
Evaluating Exchange Context. Further research may
also consider how the proposed effects of the mechanisms and contingency factors vary contextually. For
example, we expect identity- and communal-based
mechanisms to be especially effective in more collectivist
cultures. These effects may further vary across businessto-consumer versus business-to-business markets, as
business-to-consumer customers consider their peer
groups more when making purchase decisions (Hofstede, Hofstede, and Minkov 2010). In addition, the
effects of inertia- and communal-based mechanisms
may also vary depending on whether a firm is selling a
service or a product. Services are becoming increasingly
experience-centric, which usually implies an emotionally engaging relationship between the consumer and
the service provider (Voss, Roth, and Chase 2008). The
importance of communal-based mechanisms in service
contexts suggests that the moderating effects of contingency factors may be strongest when service levels are
high (vs. low). Prior research has identified many additional business contexts (e.g., channel vs. direct,
exchange with an individual vs. organization; Palmatier
et al. 2006) that future researchers might consider as
further moderating the effects proposed by our model.
Expanding International Frameworks. Current international research on RM and LPs has examined cultural differences extensively but has largely failed to
consider economic development, despite its direct influence on markets and variance across cultures. Similar
cultures might react in entirely different ways to the
same RM and LP strategies; we posit that developmental contingency factors explain some of these differences. The three developmental contingency factors
that we identify in this study should serve as starting
points for continued research into the impact of economic development on RM and LP outcomes.
Researchers should particularly consider their interaction with cultural factors, in that developmental contingency factors may have significant psychological
consequences that likely vary alongside cultural factors
and thus indirectly shape the effectiveness of RM and
LPs. Finally, additional research should investigate
which factors (cultural or developmental contingency)
exert stronger effects on RM and LP effectiveness, as
well as the circumstances in which one type might be
more influential than another.
Examining Contingency-Level Interactions. Finally,
further research may consider interactions among cultural and developmental contingency factors. For
example, high levels of resource inequality may accentuate the effects of power distance. Previously, we
posited that comparison-based mechanisms would have
stronger effects in countries with greater cultural power
distance. These effects may be further enhanced when
economic inequality is high (vs. low). In other words,
when values match economic realities, customers may
Relationship Marketing and Loyalty Program Effectiveness 15
be even more likely to seek rewards that suggest higher
social rank.
Baker, Stacey Menzel, James W. Gentry, and Terri L. Rittenburg
(2005), “Building Understanding of the Domain of Consumer
Vulnerability,” Journal of Macromarketing, 25 (2), 128–39.
Conclusion
Batra, Rajeev, Venkatram Ramaswamy, Dana L. Alden, JanBenedict E.M. Steenkamp, and S. Ramachander (2000),
“Effects of Brand Local and Nonlocal Origin on Consumer
Attitudes in Developing Countries,” Journal of Consumer
Psychology, 9 (2), 83–95.
Our review assimilates current RM and LP research and
links it to findings on culture and economic development. We list multiple mechanisms that underpin RM
and LPs, categorize them thematically, discuss the moderating roles of cultural factors and developmental contingency factors, and outline eight resultant propositions
that contribute to extant literature and offer managerial
implications. Researchers should continue to investigate
the relationship between cultural factors and developmental contingency factors; research on RM and LPs
would also benefit from a focus on the interactions of
their respective mechanisms as well as a greater consideration of the dynamic aspect of communal mechanisms.
Overall, this study broadens the scope of global research
on RM and LPs and contributes to prior literature by
delineating RM and LP research, such that it provides a
clear framework for further investigations.
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